Europe contract cracker margins rise 22-27% on contract hikes, lower feeds

LONDON (ICIS)–European contract cracker margins have made healthy gains on the back of the increases in the March contract prices and falls in the euro-denominated naphtha and liquefied petroleum gases (LPG) costs, according to ICIS margin analysis on Monday.

In the week to 3 March, naphtha feedstock costs fell by 3% week on week.

Contract naphtha-based cracker margins rose by 22% versus margins in the week ending 24 February.

Co-product credits were up by 4% on the back of the increases in the propylene and BD contract prices.

Spot naphtha-based cracker margins were up by 4%, because of the drop in naphtha prices while spot ethylene prices were stable.

The gain in margins would have been more if not for a 1% fall in spot co-product credits.

LPG-based contract cracker margins rose by more than a quarter. LPG prices were down 6%, while co-product credits were up by 6%.

Despite the rise in LPG based contract margins, naphtha margins remain at a premium to those for LPG.

The ethylene contract price for March was settled at €1,050/tonne FD (free delivered) NWE (northwest Europe), while the propylene and butadiene (BD) contract prices for March rose by €50/tonne and €350/tonne respectively.

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